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Social Security Spousal Benefit Examples

Who Can File For Social Security Spousal Benefits

Social Security Spousal Benefits Simplified

To be eligible for spousal benefits, you must be married, divorced or widowed, and your spouse either is or was eligible for Social Security.

The spouse must be at least 62 years old or have a qualifying child a child who is under age 16 or who receives Social Security disability benefits in his or her care.

Both opposite-sex and same-sex married couples are eligible for Social Security spousal and dependent benefits. So are some individuals in legal relationships such as civil unions and domestic partnerships. And those who were married for at least 10 years and have been divorced for at least two years also can apply.

Spouses can claim benefits based on their own work history or their spouses work history. They will automatically collect whichever amount is larger, but not both.

‘file And Suspend’ Has Been Totally Eliminated

You may also hear or read about another Social Security claiming strategy known as file and suspend. Unfortunately, it is no longer applicable, also due to the Bipartisan Budget Act of 2015. Using this strategy, the higher-earning spouse could file for Social Security at full retirement age , but then “suspend” his or her claim and not take benefits until later, while racking up delayed retirement credits in the meantime.

Strategies For Claiming A Spousal Benefit

Social Security offers quite a few options for how to claim your benefits, and while the options are meant to give flexibility to retirees and others, they do create more complexity. Everyone wants to get all the benefits theyre entitled to, and this complexity might obscure an avenue to receiving more money from the program. Spouses have a few ways to proceed here, and the best course of action often depends on your personal financial situation.

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Example : You Apply For A Spousal Benefit At Fra

Joan is 66 and her PIA is $1,100. Jim is 70 and his PIA is $2,000. Joan files a restricted application for a spousal benefit and delays her own retirement benefit to age 70.

In this case, because Joan is at FRA, she can limit her claim to a spousal benefit while delaying her own retirement benefit. She will therefore receive a full spousal benefit of $1,000 . Four years later, at age 70, her own benefit will have grown by 32% to $1,453 , excluding cost of living adjustments. Joan will then switch to her maximized retirement benefit and continue to collect it for the rest of her life. She will switch to Jims higher benefit as a survivor if he predeceases her.

The devil is clearly in the details when trying to understand how the Social Security rules apply to you. Consider working with an advisor with Social Security expertise to help you understand and compare your own claiming options. Making the correct claiming decision is critical and can result in tens of thousands of dollars in additional lifetime income for you to enjoy in retirement.

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Social Security Spousal Benefits: Real World Examples Of How The System Works

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The following are some examples that should help clarify some of the finer points regarding this key benefit.

In my article, I mentioned that the key factor determining the size of the spousal benefit is when you claim it. Waiting until full retirement age entitles you to a full spousal benefit valued at 50% of your spouses FRA benefit, known as the primary insurance amount filing before FRA subjects it to a reduction. The application of these rules is complicated and depends on whether or not you as claimant are eligible for your own retirement benefit and the size of that benefit relative to your spouses.

Note that all examples assume an FRA of 66 and that the claimants spouse has already filed for a retirement benefit. Married individuals can only claim a spousal benefit if their spouse has already filed for a retirement benefit. Different rules apply to divorced spouses.

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What Happens If The Deceased Received Monthly Benefits

If the deceased was receiving Social Security benefits, you must return the benefit received for the month of death and any later months.

For example, if the person died in July, you must return the benefits paid in August. How you return the benefits depends on how the deceased received benefits:

  • For funds received by direct deposit, contact the bank or other financial institution. Request that any funds received for the month of death or later be returned to us.
  • Benefits received by check must be returned to us as soon as possible. Do not cash any checks received for the month in which the person dies or later.

Example : You Are Not Eligible For A Retirement Benefit

If you do not qualify for your own Social Security retirement benefit and file for a spousal benefit before FRA you will receive a reduced spousal benefit and this reduction will be permanent:

Joan is 62 and is not eligible her own benefit. Jim is 66 and just started collecting a retirement benefit. His PIA is $2,000. Joan files for a spousal benefit at age 62.

If Joan had waited until her FRA she would have received a full spousal benefit of $1,000 . In this case, she filed for an early benefit at age 62. She will therefore receive a $700 benefit reflecting a 30% reduction for early claiming.

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Can You Switch From Your Social Security Benefit To A Spousal Benefit

Yes. If you begin collecting your own Social Security benefits at age 62 but your spouse keeps working for another few years, you are eligible to your spouses benefit after they retire if it is higher than your own. Thus, your spouse will get the maximum amount and you can file for 50% of the amount your spouse would receive at full retirement age.

Can I Collect Half Of My Spouse’s Social Security At 62

Calculating Social Security Spousal Benefits with Dual Entitlement

Not quite. The percentage of your spouse’s Social Security that you receive starts at 32.5% at age 62 and steps up gradually to 50% at your full retirement age, 66 or 67, depending on your year of birth. The amount is based on your spouse’s benefit at full retirement age.

The important point is this: Don’t bother delaying past your full retirement age. The amount you receive won’t grow beyond that age.

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The Bottom Line On Spousal Benefits

Spousal benefits can boost your Social Security if your spouse earns significantly more than you. However, if youre employed for most of your working years, you may still qualify for a bigger benefit on your own. If youre wondering how much youd qualify for on your own record or your spouses, you can create a my Social Security account to estimate your benefits and kickstart your retirement planning.

Can I File For My Social Security At 62 And Switch To Spousal Benefits Later

If your spouse is not yet receiving retirement benefits, you can claim your own Social Security starting at 62, and later switch to spousal benefits when your spouse files.

However, if your spouse is already collecting Social Security , then when you claim benefits, you are subject to deemed filing. Again, this means you will not have a choice about waiting and switching. When you apply for benefits, Social Security will automatically consider you to be applying for both your own benefits and any spousal benefits.

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Spousal Social Security Calculation

So how exactly does a spousal benefit get calculated?

What is important to understand is that the Social Security Administration calculates what is called a maximum spousal benefit.

The calculation for this is taking half of your spouses benefit, and then subtracting your full retirement age benefit.

This is the most that Social security will pay you. This max benefit does not change if you or your spouse delay Social Security past your full retirement age, or if you or your spouse claim benefits early before full retirement age.

Just to start with a very basic example.

Anne has a personal full retirement age benefit from her own earnings of $800.

Her spouse has a full retirement age benefit of $1,800.

If Anne and her spouse both file for benefits at their full retirement age. Annes spouse will receive $1,800 per month. Anne will receive her $800 per month benefit and than be trued up by Social Security with her max spousal benefit of $100 per month, for a total of $900 per month for Anne.

So hopefully this is pretty straightforward.

But, as we are going to see there is some complexity that can come up with Spousal benefits, and there are also some common misconceptions around the spousal benefit.

Crunch The Numbers To Determine When To Start Social Securitys Spousal Benefit

Explaining Social Security Spousal Benefits

Before I retired from financial planning, one of the common questions I was asked by clients was whether to begin their Social Security benefit based on their or their spouses work record and whether or not that decision could be changed later.

When one of a married couple attains at least age 62, they can begin a Social Security benefit based on their work record or a percentage of their spouses benefit. But exactly how does this work? An example will help to clarify this.

Jerry and Alice are ages 65 and 62, respectively. Jerrys Social Security primary insurance amount of $2,500 per month. If Alice does not have enough employment credits to receive her own retirement benefit, she is still entitled to 50% of Jerrys benefit, or $1,250 per month, if she begins this spousal benefit when she attains her full retirement age. Alice was born in 1958, so that will be age 66 years and 8 months.

Alice cannot begin this spousal benefit until Jerry begins to collect his Social Security benefits. It is also noteworthy that whatever Alices spousal benefit amount is, it has no bearing on the calculation or amount of Jerrys benefit.

However, if Alices monthly benefit amount is greater than 50% of Jerrys monthly benefit, there will be no excess spousal benefit amount added to her benefit when Jerry begins his at age 70.

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Complicating Factors: Spousal Benefit Reductions

An assortment of other factors can come into play, which could reduce your benefit as a spouse. For example:

  • If you are receiving a retirement benefit of your own, your spousal benefit will be reduced.
  • If you file for spousal benefits prior to your full retirement age, your spousal benefit will be reduced.
  • If you are receiving a government pension from work that wasnt covered by Social Security taxes, your spousal benefit will be reduced by the government pension offset.
  • If your spouse is disabled or if you have a minor child or adult disabled child, the family maximum rules may result in your spousal benefit being reduced.
  • If you are collecting a spousal benefit while under full retirement age and you are working, the earnings test may result in some or all of your spousal benefit being withheld.

We will discuss the GPO, family maximum rules, and earnings test in other articles. For now, we will discuss only the first two potential sources of reduction: entitlement to your own retirement benefit and filing prior to full retirement age.

Basic Rules For Spouses

  • As a spouse, at age 62 you can choose to take a benefit based on your own earnings or a spousal benefit based on your spouses earnings. The only caveat is that to receive the spousal benefit, your spouse must have already filed.
  • The spousal benefit is up to 50 percent of the earners benefit. The actual percentage depends on when you both file if you both wait until FRA or later, you collect a higher benefit. For example, if a husband files early at age 62, his benefit would be reduced by 25 percent. If his wife waited until FRA to file for a spousal benefit, she would collect 50 percent of his reduced benefit. However, if the wife decided to take spousal benefits at age 62, her benefit would be reduced even more to 35 percent of his reduced benefit.

Smart Move: A husband or wife maxes out their spousal benefit at FRA. There is no benefit to waiting longer.

  • The impact on survivor benefits is similar. At FRA a widow or widower can collect up to 100 percent of their spouses benefit . When someone opts to collect benefits early, his or her surviving spouse will also collect a reduced benefit. Conversely, when a person decides to delay benefits, he or she is providing their survivor with a larger benefit. See Question 34 for more details on Social Security benefits for surviving spouses.

If you are divorced but were married for at least ten years and are currently unmarried, you can still collect a benefit based on your exs record. See Question 32 for more details.

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Three Key Ways To Maximize Your Spousal Benefits

If you’re eligible for Social Security spousal benefits, how much you’ll receive depends on a number of factors, including your age, the amount of your spouse’s benefit, and whether you have other retirement benefits available to you. Who’s eligible? Anyone whose spouse, ex-spouse, or deceased spouse was or is eligible for benefits, once you have reached the age of eligibility, is eligible.

The maximum amount you can receive is 50% of your spouse’s full benefit. That’s straightforward enough, but the precise amount you’ll get and when you’ll get it depends on several circumstances, including your spouse’s age and work history, your own age and work history, and more. That leaves some room for you to maximize the amount you receive. And, remember, if that amount is less than the amount you’d get based on your own work history, you’ll automatically get the higher amount.

Below, you’ll find out if you qualify for Social Security spousal benefits and how to find out the amount you’ll get. And, you’ll learn the fate of a couple of once-popular spousal benefits loopholes in the Social Security rules. Nevertheless, if you know the rules highlighted in this article, you’ll be able to maximize your Social Security spousal benefits.

Example : You Qualify For A Retirement Benefit That Is Greater Than Half Your Spouses

Social Security Spousal Benefits: The Easy Calculation

Joan is 62 and her PIA is $1,100. Jim is 66 and his PIA is $2,000. Joan files for a spousal benefit.

In this case, Joans PIA is greater than 50% 0f Jims. As a result, Joan will only receive a reduced retirement benefit and will never be paid the spousal adder in Example 2.

1. Joans PIA will be reduced by 25% for early taking to $825

2. Because Joans PIA is greater than half of Jims , Joan will not be allowed a spousal benefit, even a reduced one.

Examples 2 and 3 reflect the fact that applying for benefits before FRA limits claiming options. In the case of spousal benefits for claimants who also qualify for a retirement benefit, filing before FRA prevents them from filing a restricted application limited to the spousal benefit in order to delay their retirement benefit.

This claiming option is only available at FRA and allows a claimant to grow their retirement benefit by 8%/year by delaying until age 70. Note that spousal benefits do not grow after FRA and there is therefore no benefit to delaying them.

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A Couple With Shorter Life Expectancies May Want To Claim Earlier

How it works: Benefits are available at age 62, and full retirement age is based on your birth year.

Who it may benefit: Couples planning on a shorter retirement period may want to consider claiming earlier. Generally, one member of a couple would need to live into their late 80s for the increased benefits from deferral to offset the benefits sacrificed from age 62 to 70. While a couple at age 65 can expect one spouse to live to be 85, on average, couples who cannot afford to wait or who have reasons to plan for a shorter retirement, may want to claim early.

Example: Carter is age 61 and expects to live to 77. He earns $70,000 per year. Caroline is 59 and expects to live until age 76. She earns $80,000 a year.

Mistake #2 Lower Earning Spouse Unnecessarily Delaying

Another scenario here is understanding the relationship between how the delay credits on your personal benefit compare to the boost from spousal benefits.

So perhaps Anne has heard that you get a benefit in delaying Social Security, so she decides to delay her benefit a year to get that 8% boost.

Her new benefit will be $864. But she will not receive $100 in spousal benefits any more, because remember the maximum benefit is 50% of her spouses FRA benefit.

So, she still gets capped at $900 per month going forward.

Ultimately what this means is that by Anne delaying, she lost out on a year of benefits, and the credit for delaying wasnt enough to offset the spousal benefit, so it really had no impact to her.

In the end, she gets $10,800 less in benefits. And that $10,800 is not over the course of her life even, its all at the start in a single year early in her retirement. So really a pretty big impact.

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A Couple With Similar Incomes And Ages And Long Life Expectancies May Maximize Lifetime Benefits If Both Delay

How it works: The basic principle is that the longer you defer your benefits, the larger the monthly benefits grow. Each year you delay Social Security from age 62 to 70 could increase your benefit by up to 8%.

Who it may benefit: This strategy works best for couples with normal to high life expectancies with similar earnings, who are planning to work until age 70 or have sufficient savings to provide any needed income during the deferral period.

Example: Willard’s life expectancy is 88, and his income is $75,000. Helena’s life expectancy is 90, and her income is $70,000. They enjoy working.

Suppose Willard and Helena both claim at age 62. As a couple, they would receive a lifetime benefit of $1,100,000. But if they live to be ages 88 and 90, respectively, deferring to age 70 would mean about $260,000 in additional benefits.

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